CME Hikes Gold, Silver Margins By 18.5%

Anyone surprised, please raise your hands. And yes, it was fun when margin were hiked only on surges in the various futures contracts. Now, dumps works just as well. The logic, of course, is that gold shorts are also margined. However, judging by the immediate $15 drop in gold upon the announcement, those who are short the metals certainly have a much, much bigger balance sheet and cash hoard to satisfy any collateral requirements than those long. Next: expect the Shanghai Gold Exchange to hike margins in a few short hours once China wakes up and looks at overnight PM prices in horror.

I actually think it's bullish this time. Seen as though any long with excessive-leverage has probably been stopped out by now, it's the shorts this time that are under-pressure with vol in silver/gold right now.

I think it's (the default scenario) probably true. There are too many manipulations happening, and the frequency is increasing. That Gold VIX chart from earlier was very interesting, in that it implied a major event has occured, and the markets haven't learned of it yet, let alone had a chance to digest it.

After the Boston Marathon bombing happened, any type of financial news automatically became less-important. Not to go all "conspiracy theory", but I have to wonder what our attentions are being diverted away from?

Keep in mind, the threat of the LBMA default is to the fractional reserve fiat money system.

Solutions abound, but will not be pursued by Obama and those who finance him.

At some point, this will reach a point where it can't be avoided any more - it will be interesting to see if Obama et al are successful in using force to set the direction forward or whether they will be forced to develop a productive solution.

The Gold price has risen in Japan even before the attempt to debase the currency. If Gold were to spike in Yen terms, it would have triggered a panic buying of Gold in Japan and central banks do not want that.

Gold is the only asset which is purchased in panic as we all know here.

SO: WE SHOULD HAVE FIGURED THIS OUT!! I THINK SOROS AND GARTMAN AND OTHERS WERE FIGURING THIS OUT. There is no meltdown is soft commodities as we speak (gold and Soft commodities always are joined at the hip, since the consumption does not depend on government policies unlike industrial commodities consumption leveraged by Chinese SOEs).

This move is just to avoid a disorderly price of Gold coming from the Japanese public.

JAPAN POTENTIAL PANIC BUYING WOULD BE WHY MCGUIRE TALKS ABOUT A DEFAULT, THE YEN FALL WOULD PROBABLY HAVE TRIGGERED THE BEGINNING OF PANIC BUYING IN JAPAN.

Soros figuring it out? Soros has figured it out. If you are a very smart mother fucker who has faced the abyss vis a vis nazi regime as it engulfed Hungary, you figure it out early.

Soros always has Janus headed comments-- "gold is the ultimate bubble" - parse that. this after gold goes over 1K on first bout of QE. Not gold is in a bubble... Gold is the bubble after all other bubbles have been inflated / popped...

As well his recent comments about gold not holding up as a safe haven...but will hold up on central bank buying.

Also remember that Gold had reached its very old 1980 ALL TIME HIGH in yen only a few weeks ago.

What typically goes on when an old all time high is breached? IT GOES OFF THE RACES!!!

Now what would have happend to flow of yen, it would not have gone to treasuries!!!

ALSO:

Since Gold shapes inflation expectations and since Japan is where there is the most risk of hyperinflation, this coordinated move on Gold was absolutely crucial to make sure that this risk of hyperinflation is pushed away.

Now I guess Kyle Bass who was wondering why the Gold is low has his answer...

All the indications are the economy suffered a 2008-level implosion starting around Oct/Nov 2012, and the reality of that is starting to appear. Mix in Cyprus and widespread distrust of governments, both by citizens and other governments, and you have a witches' brew for deflation and bank runs before the hyperinflation hits. They have access to unadulterated statistics and see the writing on the wall.

Standing for gold delivery is the visible symptom of mistrust, and they're trying to disrupt it before the lie is exposed, and it's not working.

One needs to wonder if the Stock Market is next. The action looked bad on all fronts. If the economy was growing platinum would have at least parted ways from gold. Since it has not I don't like any assets except for cash.

The blank makers have to get their metal from somewhere, and it's not going to come from good delivery bars bought on the futures exchanges, so that leaves the miners. I don't think the miners are going to be super excited about production at low prices and will scale back. Physical supply is going to get tighter, ergo premiums higher.

Of course if the LBMA default rumors are true, AU will go to the stratosphere shortly, and premiums will be the last thing to worry about.

Mine too, but he only had about 30 of them left. And other than a few 100 oz bars, he was completely out of all other stock. He has orders in process but said he doubts they will be filled. None of his sources have any physical available.

LCS here did a brisk business today even with high premiums. Folks were lined up with a thirty minute wait. Most were buying except for one guy selling sofa leftovers to buy a pizza. Inventory was thin but fresh allocated goods were arriving with more arriving daily. Folks who weren't particular about scratches or newness could find something to own. Interestingly, most in the store were Indian or Asians. I think they understand money better than American born.

Umm, "any scarcity due to low prices will be short-lived"? How does that work? If the price of Hershey bars were artificially suppressed and held to 25 cents, the scarcity of Hershey bars would not be short-lived -- it would last as along as the price is suppressed.

Also, your notion that "prices are low because institutional investors are willing to let go of their metals right now" is false. They are letting go of paper, not metal.

"No one has been unable to buy silver or gold in as large a quantity as they want"?!? Have you seen Apmex today? Try buying yourself a couple hundred 2012 or 2013 silver eagles. You won't be able to get them. So, what are you talking about?

Any thinking individual can see these metal takedowns are orchestrated at the highest government and financial levels.
So we have this massive, irrational 2 day smash of the PMs just prior to a terrorist bombing.
Too clever by half.

I'm not sure about any link with the terrorist bombing, but to me the PM smackdown is a pre-cursor to a much bigger move in the markets. Sorta like 2008 redux, but the TBTF banks got their liquidity pumped up pre-emptively by easing their short positions. I think this is a long way from being over, and gold might just be standing as the "winner" at 1,200 in a month or so.

No matter, my stack stays put. Pretty sure it's going to be the most valuable (worldly) thing I have over the next 5-10 years.

Nobody's sure about anything, but I wonder what the mathematical probablility of the largest colllapse of gold prices in 30 years happening on the same day as the most spectacular (if not most deadly) terrorist attack on US soil since 9/11 is. Care to crunch those numbers? It seems fantastically improbable to me. Fantastically.

Does the big drop in precious metals and other trading products have to do anything with the news of a 2nd case found in China where a child affected with bird Flu who is showing no symptoms.. this can get a bit tricky .. since now we do not know how many of the 1.1 billion people in that country could be affected and not show any symptoms :( :(

If more such news keeps coming on TV then I might also consider keeping some money under the mattress... so whats to say for big corporations..

Somehow I doubt the small spec shorts benfitted from this in any measurable way. JPM on the other hand likely did, and this selll off will only enhance their ability to maintain their suppression strategy.

I used to think the shorts would get theirs but I no longer believe it. They own the house and the house never loses. When (or "if" because nothing seems certain now) the big move comes in gold, the TBTFs/bullion bank shorts will be covered. They will not lose.

Oh I know--after some years, I quite trading CME a few years back. Now I hold accumulate and wait. But this is beyond what I expected, frankly. I have this weakness for trying to put a picture that makes sense. I keep going back to Sinclair--he's been saying for years that it will take the final launch when the bullion banks are all covered and net long It makes sense.

Why would they bother? If there's to be a new currency, why must it be gold backed? Maybe because the real powers behind the scenes already have most of the gold?

Trust. The people don't trust the governments, and the governments/central banks/TPTB don't trust each other.

Due to gold's unique lack of a counterparty, trust is implicit as long as it's not stored at the NY Fed.

I'm sure the real powers have the most gold, but it goes beyond that. They'd much prefer to operate without the restrictions and accountability imposed by gold. I'd expect whatever comes next to have some gaping holes that lets them play fiat games, maybe a two-tiered currency, one for the proles, one for TPTB.

It's what's for dinner... I think they ought to Force Majeure the shit out of Derivatives and just zero them out. That's supposed to happen anyway (but it won't).

This has already been suggested by some economists who know more than me, which is next to nil. But it would eliminate a lot of fear and leverage banks have over the rest of us, not to mention help prevent the subordination of helpless depositors.

It would just be too fucking bad for any squids out there with a vested interest in the Apocalyptic collapse of civil society.

Not sure that it will drop to $5, I don't foresee it going that far down. Your right though, always try and increase your stack, heck, when you have a pile and you get old, give some to your grand kids. We know they won't have any social security, the way it looks, we may not have it either.

Margins, liquidity, puts and calls, HFT, algos, QE, bailouts - all a part of the same disease - making sure the banksters and corporatocracy don't have to deal with the invisible hand of individuals making choices - so they can use sleight of hand.

I think that's why US has been pandering to the Muslim Brotherhood (BHO aside) and why Benghazi was 'a bump in the road'. MB is a Sword of Damacles held over heads of the House of Saud, as we tell them only the US can protect them to keep them in line. But I don't think it will matter much longer.

I still find it hard to believe that the PM prices have 'tanked' by 1/3 since last Aug., i.e. before we had QE2, QE3, etc.

If you can't rely on all these Gold & Silver "experts" and "advocates" here on ZH, who can you rely on? Krugman? He asks with a great sense of irony. Realizing with a sense of horror, that "Dr. Evil" was right, incredible as it seems, when he said it was "a bubble".

And don't give me any of that "unrealized" loss crap. "Opportunity Cost" is Opportunity Cost. If I had to liquidate today, I'd have lost 1/3. How long before it breaks even? Not to mention the lost potential for gains elsewhere?

So... how is Gold a fucking "STORE OF VALUE"!? Esp. when it can go even lower!? MFers!!!

Shall I apply the sailboat/yacht principle, and throw more money at it? Like the guy who posted earlier today, that he kept buying all the way down on BTFD, until he now has no more left to buy? /s

If I can't trust TPTB/Krugman, and I can't trust ZH and its Gold_Shills, then I have no choice but to proceed on... Principle: DIVERSIFY! Diversify according to asset class, size and geography! And fuck these 'opinions' of smooth-talking Gold_shills! Onshore and offshore.

I'm half-tempted to downgrade ZH to a financial tabloid rag. Scotty, what's taking you so damn long to fire up those photon torpedoes!? [Miffed!]

"So... how is Gold a fucking "STORE OF VALUE"!? Esp. when it can go even lower!? MFers!!!"

That comment implies such a profound lack of understand for the concept of "store of value" that it really does not deserve an answer...but I'll toss one at you anyways: You may or may not have noticed that, not only did gold and silver drop in price...but so did everything else (gas, wheat, corn, coffee, etc etc etc). If you put pen to paper with a little assistance from a calculator, you will find that an ounce of gold or silver will buy you pretty much the same amount of anything today as it did last week and will continue to do so in the future. How am I so sure of this, you may be asking yourself? Simple: I have 5 thousand years of evidence to back this "theory". Hence, the purchasing power of your gold or silver has held up...and THAT is why it's use as a way to "store value". It preserves your purchasing power.

Great, you can still buy the same amount of wheat as you as could last week with an ounce of gold. Too bad no one will accept gold or silver as payment! The "store of value" concept should be used when comparing gold/silver to USD. Guess what - your ounce of gold buys less dollars than it did last week. And, to make matters worse, those same dollars will buy more wheat/corn/coffee etc. as the price of those commodities plummet and the USD holds steady. In the very long run, maybe you can find some merit to your argument, but the price action in the last 2 days is NOT supporting your gold/silver = "store of value" thesis.

You are right the last two days, bravo! But am I right in 13 years. You should carefully study the history section, which is called "All history collapses of the world stock markets." You have to hurry, otherwise you will be excruciatingly painful to realize their own ignorance.

Relax. I'm down over 10% of my total wealth since last Thursday, yet there is a calm inside me I'm not used to. I'd be running around like a headless chicken if this happened in other circumstances yet other than annoyed I could have a lot more at todays prices (if I could get it close to spot even), it does not matter for me, I know that I've done the right thing sitting on my stack. It's going nowhere and it will be what saves my family from some very bad time in the not to distant future.

All I want to figure out is at what entry point I should start buying au/ag phyz once more to add to my stack.

The problem is that both Krugman and zerohedge are wrong for different reasons, and the truth follows a completely different path. Contributors to zerohedge and friendly websites believe in Austrian economics and just like their peers, altough they have a perfect (and much better than me or most others on this blog) understanding of the functioning of financial markets, the theory they stand on is entirely wrong, and therefore their predictions on a lot of matters prove to be wrong. And it is reay funny to watch their contradictions from one post to another. Just look at today's posts. There's a very nice post on Japanese monetary policy since 1990s and how massive quantitative easing and debt-monetiziation was not able to prevent deflation for over 20 years in Japan. And then consider all the fear-mongering posts on zerohedge about the forthcoming inflation to U.S, and how a 0.5% increase in inflation becomes "the first signs of hyperinflation coming to U.S" in here, despite numerous posts by other Tylers show de-leveraging going on at full speed in the private sector. Now, as they know very well as well, there cannot be any inflation, regardless of huge budget deficits or monetization of public debt or quantitative easing, when there's such a massive de-leveraging going on. But accepting this is completely against their "Austrian" economics' arguments, so although they see what is happening, they are trying to see what they want to see. Their theory that printing money leads to inflation has been falsified as a general rule by Japan first, and by the entire developed world after 2008 (although it might lead to inflation under certain conditions). Now it is time to discard those simplistic theories and relationships, but that is so hard to do...

With regards to gold, there are many different factors at work, and sadly zerohedge's bias towards Austrian economics and its inability to present a coherent structural analysis prevents it to come up with an unbiased prediction. And the posts on gold in zerohedge are terribly biased due to Austrian economists' love in the gold standard. Adherence to the completely-mistaken Austrian economics makes them believe inflation must show its head at some point and therefore gold must go up. However, as many posts here have also argued, gold has not been going up because of inflationary pressures, it is going up because

1) Traders, economists, money managers, who are trained in mainstream economics and therefore poisoned with the fear-mongering that printing money will lead to inflation, allocate some leveraged funds to speculating in paper gold-markets, pushing the price of paper gold up. So it is not printing money per se leading to an increase in the price of gold.

3) COMEX connects the price of paper gold to the price of physical gold, so price is determined by the relative strengths of the two forces above. (there are premiums on paper price if you want to buy gold in the west, but not in turkey for example. You can purchase as much gold as you want at the paper price) However, this creates perfect opportunites to smack down the price of physical gold by naked short selling in paper markets, as has been said zillions of times here.

So you might be investing purely long-term and believe that the paper markets will at some point default and et completely disconnect from the price of physical. This is the position a lot of people take in this blog. In such a case, such drops in paper price should not bother you. But you might also believe this is a stupid theory and such a thing will not happen in the medium run, which might be what you care about. Then, gold is like any other asset for you, open to speculation, and much more prone to manipulation due to the shallowness of the markets, and the hatred of the regulators against the barbaric relic, which removes all incentives to regulate and prevent manipulation, if not creating incentives for the regulators themselves to manipulate the gold market to restore faith in currencies. If you believe this, then why are you invested in gold? Just put your money in bonds and stocks, and do not fight the central banks in the short run.

Krugman (and the rest of the academics) is clueless, he's just like a broken clock, do not even listen to him. He believes in fantasies like IS-LM curves, liquidity traps and thinks banks need savings to lend. Just ignore.

You have to leave the computer. You have to go to the supermarket for food and look at the real inflation. Compare graphs of rising gold prices and the growth of the money supply.
I just want you to be yourself could see and understand, all the absurdity of your claims about the gold.

You have to learn the definition of inflation. You have to learn the definition of hyperinflation. You have to learn the definition of asset price deflation. You have to live through real inflation (25%+ annual). You have to read Japanese economic history. You have to learn why gold prices is not related to money supply any more. You have to learn what gold standard is. You have to learn when gold standard was abolished. You have to learn the definition of money supply. You have to do so many things more before you can speak about gold...Let me know when you have done all these, then we will speak.

And remember, these will take much more time than typing helicopter Ben, zimbabwe, hyperinflation and gold in the same sentence like all the parrots on this blog..

Lol dude take responsibility for yourself. Sorry the Internet couldn't satisfy your need to be given meaning and direction. Feel free to "downgrade" me, because I am a man and not a website or ideology or screen name.

Enough with all the crap about how everyone here is happy with the price drop so that they can "stack" more. You all thought that silver and gold were going "to the moon" and it didn't. All of the metals blogs you follow, ZH included, told you to keep adding at the peak prices because it could never go down. Not once did anyone preach caution or maybe a little profit-taking. Yet, one of your idols Eric Sprott has been selling tons of PSLV prior to this latest bloodbath. Charitable obligations? I call bs. He knew what was coming, and did some prudent selling. Too bad he didn't provide fair warning.

Are you fucking stupid? Anyone who is "stacking" at ZH is not talking about earning a fucking income from price speculation. They are talking about safeguarding the value of their wealth incase of a calamity. Therefore, a drop in prices is another reason to stack more. You may ask, Is a complete collapse of the financial system/FRN even possible? That's a smart question. The jury is out, but many including myself believe it is. They don't call us "Doomers" for nothing, doncha know.

That's bullshit. There are tons of older people, mostly of the tea party variety, who lost a lot of money in their 401ks during the 08 crisis and have spent the past few years trying to make that money back so that they can retire in comfort. However, being the untrustworthy folk that they are, they have turned to gold and silver instead of the stock market casino, and have done well for themselves. But, a massive gold/silver sell-off now will wipe them clean yet again. I guarantee you that the majority of these people are not planning for a complete collapse of the system that you "doomers" are preparing for. And why should they - who wants to live their lives and waste resources preparing for an event that is HIGHLY unlikely? Further, in your collapse scenario, what the fuck is gold going to be good for?? I would much rather have guns/ammo than gold if that was the case.

It all depends on the individual why they are hedging against the fiat world with gold, and what they expect of the world should there be a financial collapse. Believe me, its been talked to death at zh. Some do it because gold has ALWAYS been valuable throughout human history. Some expect to croak soon and want to leave a legacy. Some, like me, expect a period of chaos, hyperinflation, followed by a weaker but stable economy with growth potential. A period that gives great advantage to anyone with solid assets, like gold.

Sure guns and ammo are good ideas if you intend to fight people or deter them from fighting you. But you will see that "Doomers" also consider food sources, clean water, and medicine as well as security. History, and very recent history at that, have much to teach us. This amount of printing, debt, and economic malaise is unsustainable. The "It can't happen here" crowd always suffer the most, hence the hedge. We are merely being realistic with the facts we can verify with our own eyes.

It's about preserving the purchasing power of a life's work of labor for some, and hedging against disaster for others. The entire world is broke and anyone who thinks they will be slumdog millionaires and remain unscathed after the SHTF is hoping for an awful lot.

After a boom there's always a bust. Protect the boom. Then wait patiently for the next boom.

I think the train is leaving the station and the fundamentals are finally taking over -- which is exactly what is causing the Western banksters to freak out. If everything is under control, and fundamentals don't matter, then there's no Cyprus, no Japan, and no China carting off 800 tonnes of physical gold since January.